5. The cost of retained earnings the required rate of If a firm cannot invest retained eamings to earn a rate of return return on retained earmings, it should return those funds to its stockholders The yield on a three-month T-bill is 3.2%, and the yield on a 10-year T-bond is 4.6%. The market risk premium is s.7%. Alien Co. has a beta of 0.87, Using the Capital Asset Pncing Model (CAPM) approach, Allen's cost of city is The cost of equity using the CAPM approach Cano Co. is closely held and, consequently, cannot generate reiable inputs for the CAPM approach. Cano's boncs yield 11.5%, and the firm's analysts estimate that the rrm's risk premium on its stock over its bands s 4S%, Usnu the over-own-bond-yield judgmental risk premium approach, find the firm's cost of equity 16.0% 20.0% 19.2% 15.2% The cost of equity using the Discounted Cashflow (or Dividend Growth) Approach Turnbull Co.'s stock is currently selling for $45.56, and the firm expects its dividend to be $2.35 in one year Analysts project the frm's growth rate to be constant at s.7%. Using the dscounted cash now (DCF) approach, whats Turnbul's cost of equty? 13.6% 10.9